4 minute read

Do I Need an Estate Plan?

Wondering whether or not an Estate Plan is something you need? Read our guide to learn the plan that's right for you.

Do you need an Estate Plan? Short answer - Probably. 

The fact is, almost every adult needs an Estate Plan. If you’re over the age of 18, have any money in the bank, own a home, and/or have children or other dependents, you should have an Estate Plan in place to protect yourself, your assets, your loved ones and, perhaps most importantly, your legacy. 

Keep reading to learn:

What is Estate Planning?

Estate Planning is a culmination of documents and plans you put together to make your intentions known. They can be very detailed and complex, or they can be fairly simple and straightforward. 

How involved your Estate Plan is depends on a number of things: how big your estate is, your current stage of life, your plans and goals for the future, what your intentions are for your loved ones after you pass away, and more.

The biggest thing to remember regarding an Estate Plan is this: you don’t need to have a huge estate to benefit from a comprehensive plan. 

Parts of an Estate Plan

There are several parts to an Estate Plan. Below is a brief overview of the major players. If you’re feeling overwhelmed at the thought of completing all of these, take baby steps. Start with your Will, and when you’re feeling more confident, you can move on to the next thing. 

Yes, it’s important to complete as much of an Estate Plan as makes sense. But remember, when it comes to protection (which your Estate Plan can offer), some is better than none. So start small and work within your comfort zone.

Will

Your Will is a document that expresses your intentions for how your property and assets should be distributed after you pass away. It contains your major assets, and it details where they should go. You name an Executor of your Will, and this person will oversee your estate when the time comes. He or she will pay off any debts you have, using the funds in your estate, and then will distribute remaining property and assets to the beneficiaries you name.  

Trust

A Trust is a binding, legal agreement that involves three parties: 

  • The Trustor - you, also known as the Grantor or the Settlor

  • The Trustee - the person you name to be “in charge” of your estate

  • Beneficiaries - the person or people you name throughout your plan who will benefit from part or all of the assets in your estate

A Trust-Based Estate Plan is the most comprehensive plan. It offers greater control over how you want your assets distributed and allows you to avoid probate court. Own a home or have over $150,000 in assets? A Trust may be the best option for you.

POA (Financial, Medical and Durable)

POA stands for Power of Attorney. A POA authorizes someone you name with either financial or medical power to make decisions on your behalf. 

The “Durable” part comes into play if you want to name someone now who would be able step in should you become incapacitated and unable to give your authorization to appoint an agent. The key with “Durable” is it will remain in place through and beyond your incapacitation, so it can be important to have if you want someone to be able to make decisions when and if you suddenly can't make them yourself. 

HIPAA Authorization

The Health Insurance Portability and Accountability Act of 1996 was established to create federally-imposed standards surrounding healthcare and privacy. The part that affects your Estate Plan has to do with privacy. Through a HIPAA form, you can authorize that it's OK for your private medical information to be released to specific people in your life.

Guardianship

If you have children or minors you care for, setting up Guardianship is an essential safeguard you can put in place. Guardianship means those most vulnerable in your life will be protected and placed, if ever needed, with the person or people you choose to care for them in your absence. 

When Does Your Estate Plan Go Into Effect?

Some parts of your Estate Plan go into effect immediately, whereas other parts will only be active if a certain life event or trigger occurs. 

For example, your Will is created while you’re alive, but nothing in it goes into effect until after you pass away. Your Trust, on the other hand (especially a Living Trust), is a living, breathing document that goes into effect immediately upon funding it and can impact your assets, wealth and stability both now and into the future.

Do I Need to Update My Estate Plan? 

You can definitely relax for a while after you create your Estate Plan. But Estate Planning isn’t something you do once only to never look at it again. It’s important to review and update your Estate Plan after any major life event. An event that could qualify as “major” could include: 

  • A birth

  • A death

  • A marriage

  • A divorce

  • A remarriage 

  • Blending of families

  • An out-of-state move

  • Selling property

  • Gaining new major assets

  • Losing, selling or gifting major assets

  • Property title changes (IE, buying a partner out)

  • And more…

If any of the above occur, it’s important to at least review the Estate Plan documents you took the time to create. If you don’t have any major life events, it’s still advisable to review your plan every three to five years to ensure that everything is still accurate and that you still have a plan in place that represents your final intentions and will preserve your legacy after you pass away.

Estate Planning can seem daunting, but most people find that after they understand the components of a great Estate Plan, all their worry about getting started was really unfounded. It’s that first step that’s often so hard to take. But armed with the knowledge you now have, you’re prepared to move forward with a plan that will prepare you for your own future and for the future of your loved ones. 

The only question left to ask is: are you ready to start your Estate Plan today?  

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